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Mortgages & the Budget

So...what did the Budget say about the state of the Mortgage Market?

First of all, I really like the fact that the Government has acknowledged there is a real need for proper disclosure to consumers in the area of Collateral Mortgages (check out this CBC Marketplace report if you haven't already seen it) They plan to continue to raise public awareness about this and indicate that lenders selling collateral mortgages will be made to provide enhanced disclosure.  So that is a GOOD THING!!

Second, they have acknowledged that recent price increases in housing have largely been limited to Toronto and Vancouver and are not broad-based as they had been prior to 2008.  I like that they have specifically acknowledged this because I believe legislation to cool those markets has a detrimental effect on smaller markets such as ours, so hopefully they won't continue to paint the whole country with the same brush!

Finally, I really like the fact that Government recognizes that Canadians benefit from competitive financial services and they are implementing new rules which should help level the playing field for smaller banks!  Competition is healthy and in the best interest of our clients as we have many smaller lenders who are excellent alternatives to the Big Banks!

Another important development in the mortgage industry is that recent increases in housing activity and prices (mostly in the larger markets) has not been accompanied by an acceleration in residential mortgage growth.  The Government indicates, "This suggests that homebuyers are purchasing homes with larger down payments and that existing homeowners are taking advantage of low interest rates to pay off their mortgages at a faster rate."  I believe the recent change to the refinancing rule where you can only borrow to 80% of your home's value may have had a drastic impact on that number as well since we are no longer using our homes as ATM's!

Here is what mortgage credit growth looks like over the last few years...

Overall, the Budget as it pertains to the Mortgage Industry was positive, and it is nice to know that we won't have to adjust to another major rule change right away!
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